A positive start to the Asian session faded somewhat on news that the U.S. is preparing new sanctions on Chinese officials over Hong Kong crackdown.

Chinese markets broadly lower.

S&P 500 futures briefly rallied above 3700 before backing off slightly.

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U.S. preparing new sanctions on Chinese officials over Hong Kong crackdown - sources

The United States is preparing to impose sanctions on at least a dozen Chinese officials over their alleged role in Beijing’s disqualification of elected opposition legislators in Hong Kong, according to three sources, including a U.S. official familiar with the matter.
The move, which could come as soon as Monday, will target officials from the Chinese Communist Party (CCP) as President Donald Trump’s administration keeps up pressure on Beijing in his final weeks in office. President-elect Joe Biden takes over on January 20.
The State Department and the White House did not immediately respond to requests for comment.
Up to 14 people, including officials of China’s parliament, or National People’s Congress, and members of the CCP, would likely be targeted by measures such as asset freezes and financial sanctions, two sources said.
The U.S. official, speaking on the condition of anonymity, said multiple individuals would be sanctioned. A person familiar with the matter said the group would likely include officials from Hong Kong as well as the mainland. The sources did not provide names or positions of those being targeted for sanctions. Two sources cautioned an announcement could still be delayed until later in the week.
Hong Kong’s Beijing-backed government last month expelled four opposition members from its legislature after China’s parliament gave city authorities new powers to curb dissent. The move triggered mass resignations by pro-democracy opposition lawmakers in the former British colony.

Linking in to that story

Ex-Hong Kong lawmaker says some bank accounts unfrozen, no longer trusts HSBC

Former Hong Kong democracy lawmaker and activist Ted Hui, who fled to Britain after facing criminal charges, said some of his bank accounts had been unfrozen and he had moved funds swiftly from HSBC because he no longer trusted the global bank.
Hong Kong police said late on Sunday they were investigating a Hong Kong person, who had absconded overseas with bank accounts being frozen, for suspected money laundering and possible violation of the new national security law.
It was not immediately clear if police were referring to Hui, one of several pro-democracy activists and opposition lawmakers arrested last month and charged with disturbing legislature proceedings.
Hong Kong’s Security Bureau issued a statement on Friday that, while not naming Hui, said “running away by jumping bail and using various excuses such as so-called ‘exile’ to avoid one’s responsibility is a shameful, hypocritical and cowardly act of recoil”.

Unsurprisingly, firms are heading for the exit, with Singapore set to benefit...

Finance leads Hong Kong's first business exodus in 11 years

The number of foreign companies with offices in Hong Kong has fallen for the first time in 11 years, with a notable drop in financial firms, as concerns over social unrest and the city's political autonomy push businesses to consider other Asian hubs.
U.S. investment management firm Barings on Thursday said  it will open an office in Singapore to serve as its hub for Southeast Asia operations.
The exit of white-collar businesses marks a setback for Hong Kong, long a favorite destination for  global companies seeking an Asian base of operations, thanks to its low tax rates, English-speaking workforce, and the "one country, two systems" framework that granted the city a high level of autonomy following its handover to China from the U.K.
Recent unrest over China's growing influence, including a controversial and sweeping national security law enacted earlier this year, has led many overseas companies to reconsider the benefits of setting up shop in the city.
Barings is not the only financial company looking elsewhere. Deutsche Bank also began basing the chief executive officer for its Asia operations in Singapore instead of Hong Kong in August.
The number of nonlocal companies, including those headquartered on mainland China, with offices in Hong Kong  fell 0.2% from a year earlier to 9,025 as of June, according to a recently published annual survey by the Hong Kong government -- the first drop since 2009. The decrease expands to 2.8% when excluding mainland companies.
Of the 9,025, the number of companies with regional headquarters in Hong Kong dropped 2.4% to 1,504, and those with regional offices dipped 0.4% to 2,479. The overall number of employees at nonlocal companies also declined by 10,000 to 483,000.
The foreign exodus was particularly stark in the financial sector, with 52 banks and financial companies and 24 insurers leaving the city. The Vanguard Group, The Motley Fool and others have also announced their exits from the city since June.

China's exports surge on hot demand for PPE, remote working tech

China’s exports rose at the fastest pace since February 2018 in November, helped by strong global demand and as the factory recovery in the world’s second-largest economy outpaced those of its major trading partners.
Exports in November rose 21.1% from a year earlier, customs data showed on Monday, soundly beating analysts’ expectations for a 12.0% increase and quickening from an 11.4% increase in October.
Imports rose 4.5% year-on-year in November, slower than October’s 4.7% growth, and underperforming expectations in a Reuters poll for a 6.1% increase, but still marking a third straight month of expansion.
Analysts say improving domestic demand and higher commodity prices helped buoy the reading.
That has led to a trade surplus for November of $75.42 billion, the largest since at least 1981 when Refinitiv records began. It was also wider than the poll’s forecast for a $53.5 billion surplus and a $58.44 billion surplus in October.
China’s exports were supported by strong overseas demand for personal protective equipment (PPE) and electronics products for working from home, as well as seasonal Christmas demand, Nomura analysts said in a note.
“We believe China’s export growth could remain elevated for another several months due to the worsening COVID-19 situation overseas,” the note said.
However, they noted some signs that demand for these pandemic-related goods was losing momentum.
Booming sales of fridges, toasters and microwaves to households across the locked-down world have helped propel China’s manufacturing engine back to life, super-charging demand for key metals like steel, copper and aluminium, after a sharp slump early in the year.
A sharp appreciation of the yuan in recent months could also cloud the outlook for exporters. Some firms reported that a strong yuan squeezed profits and reduced export orders in November, the statistics bureau said this week.
The yuan has booked six straight months of gains, its longest such winning streak since late 2014, and is trading at 2-1/2 year highs.
The strong exports widened China’s trade surplus with the United States to $37.42 billion in November from $31.37 billion in October.
While a Biden administration is expected to soften some of the diplomatic rhetoric seen in strained U.S.-China trade relations in recent years, there are no immediate signs the President-elect intends to unwind the punitive tariffs introduced under the Trump administration.

Brexit talks: Angela Merkel and Emmanuel Macron in final bid for a deal

The French and German leaders agreed to weaken European Union demands for a so-called level playing field, a Brussels diplomatic source said.
Although more “conciliatory” than past positions taken by France, the new joint stance comes with a renewed warning that Mr Macron is ready to abandon talks to concentrate on preparing for a no-deal.
Mr Johnson and Ursula von der Leyen, president of the European Commission, will speak today after another two days of negotiations that both sides had billed as a final push.
The prime minister is due to publish new legislation in effect ripping up parts of the Brexit withdrawal agreement tomorrow unless a trade deal is within reach. Downing Street refused to confirm the timetable but a cabinet minister told The Times that the Taxation (Post-Transition Period) Bill would be published after a vote tomorrow.
Ministers say that the legislation, along with the Internal Market Bill, is necessary to ensure the smooth flow of goods between Britain and Northern Ireland. The EU says that it flouts an international agreement less than a year old.
Senior government figures acknowledge that introducing new laws would be regarded as an “aggressive” move at a critical moment. It would come before a meeting of the European Council on Thursday in which EU leaders could settle the final details of an agreement.

Nothing much has changed from yesterday. The three key issues remain.

Full Brexit details here ICYMI;

Week Ahead - Brexit, EU Council & ECB, China Trade
‌‌A blockbuster week awaits. * Brexit ‘Endgame’ * EU Council Meeting * ECB Meeting * U.S. Government Funding/Fiscal Stimulus * China Trade We’ve got to start with Brexit haven’t we? Monday will see a barrage of headlines, sources, leaks, & opinions. > “This is the final throw of the dice”…

Michel Barnier has just started briefing EU ambassadors (07:00GMT), and then we're off to the races.

The current state of play (thread);

JPM still expecting a deal, but less confident than they were.

The £100bn lockdown bonus: Bank of England economist Andy Haldane says Britons have saved bundles of cash during the pandemic... and now it's time to spend to rescue the economy

He said that when restaurants, pubs and non-essential shops were closed, many people spent more on other things instead.
'People have shown their willingness to [be flexible] where they spend and how they spend. They are not going to the pubs and restaurants, but they have switched to takeaways and patio heaters.'
Mr Haldane said that between April and June, the Office for National Statistics' savings ratio – which measures how much of our disposable incomes were set aside – rose to 29 per cent.
The equivalent figure was just 6.8 per cent for that period last year. The new ratio is more than twice as high as the previous record of 14.4 per cent, set some 27 years ago.
Mr Haldane admitted the new figure has not been 'evenly-balanced' across society. 'Nonetheless it did mean there is a pool of excess savings – excess because they weren't planned.
The £100billion treasure chest is concentrated among the better-off, who carried on receiving most of their incomes during lockdown but saw their spending plunge.
Many middle-class professionals have been able to work from home – meaning no commuting costs. In addition, they have been unable to spend cash on the typical luxuries such as new clothes or holidays.
Those lower down the income scale have not saved as much, if anything. Many have lost their jobs or become much worse off due to Covid-19 because their working hours have been slashed.
Figures from the Institute for Fiscal Studies show that middle-class families had, on average, an additional £350 a month sitting in their bank accounts between March and September.
The poorest households were typically £170 a month worse-off.
However, there remains a vast pile of cash waiting to be spent by the army of accidental savers. This can deliver a major boost to the nation's prosperity, which has been battered by the coronavirus. It could also see the economy recover much more robustly, rather than leaving it in the doldrums as had been feared.
A surge in spending may not be enough to save beleaguered high street chains, as shoppers are increasingly buying online. The pandemic has already proved the final straw for some.
Plenty of challenges remain. Many forecasters – including the Bank of England – expect national income to be down by more than 10 per cent this year. The Bank also expects unemployment to rise to 7.75 per cent – the equivalent of 2.65million people on the dole.
Nevertheless, Mr Haldane and others are increasingly hopeful of a rapid revival. He also believes the pandemic could actually help to end the poor productivity which has dogged the UK economy for a decade. The need to work from home has forced firms to invest in technology and train workers in digital skills which can lead to innovation and growth.
Those who do lose their jobs might find it easier to get a new one when compared with previous recessions. This would also lower the risk of becoming unemployed long-term.
Retail and hospitality workers are some of the worst-hit by the current turmoil. Typically young, and more likely to be women, they often have skills they can transfer to other lines of work.
By contrast, those who lost out in the 1970s and 1980s were middle-aged men in specialised industries who found it difficult to find their next job. Despite this, many economists had remained pessimistic about the UK's prospects due to its handling of the pandemic and worries over Brexit.

With Covid incidence at record levels, more stay at home orders and restrictions are coming into play, making a stimulus deal more likely.  

Trump, McConnell Likely to Back Relief Bill, Senator Says

President Donald Trump and Senate Majority Leader Mitch McConnell will come “on board” with a $908 billion package to provide pandemic relief, according to a member of a bipartisan group that’s seeking legislation before the end of the year.
“President Trump has indicated that he would sign a $908 billion package -- there’s only one $908 billion package out there and it’s ours,” Senator Bill Cassidy, a Republican from Louisiana, said on “Fox News Sunday.” “The pain of the American people is driving this and I’m optimistic that both of those leaders will come on board.”

House Speaker Nancy Pelosi and Senate Democratic leader Chuck Schumer have endorsed using the bipartisan proposal as the basis for negotiations. A bipartisan group of 10 senators that’s been holding talks for the last two weeks will have another call on Sunday, Democratic Senator Mark Warner said on CNN’s “State of the Union.”
“We don’t have a choice now, it’s one of those things that has to be done,” Democratic Senator Joe Manchin of West Virginia said on NBC’s “Meet the Press.”
A final version of the proposed legislation could come early this week, Cassidy said.
He said the bill extends unemployment benefits and lengthens a moratorium on evictions with aid given to landlords, but there’s no plan to include another $1,200 stimulus check to help the economy.

“This is not a stimulus bill but a relief bill,” Cassidy said. “There may be a stimulus check, but that would be part of a different piece of legislation.”
Durbin said the last round of $1,200 checks cost $300 billion, so it couldn’t be included when the mandate was to limit the total proposal to $900 billion.
“The Democrats have always wanted a larger number, but we were told we couldn’t get anything through the Republicans except this $900 billion level,” Durbin said.

On the government shutdown front;

Iron ore has been on a monster rally this year, with the price hitting seven year highs overnight.

Someone wants to spoil the party...

China Iron-Steel Group Urges Regulators to Step In After Ore Price Spike

The price of imported iron ore has recently soared because of human-induced market tensions, and Luo Tiejun, vice chairman of the China Iron and Steel Association, called on authorities to intervene as soon as possible yesterday. The Dalian Commodity Exchange will investigate and crack down on illegal transactions, the bourse previously announced.
The recent upward spiral in the imported iron ore price has surpassed market expectations, raises risks for the sector, and destabilizes the industrial and supply chains, Luo stated, Xinhua News Agency reported.
Incoming overseas iron ore has lately taken leave of the fundamentals of supply and demand. Artificial strains such as abnormal bid tenders by traders boosting the index rise and a short squeeze as the delivery month looms have all bedeviled the futures market, Luo noted as he called on market overseers to intercede forthwith.
Port inventories of iron ore have ended an 11 straight weekly rise and have fallen now for three weeks in a row, but are still hovering around the yearly high, said He Hangsheng, a steel analyst with leading China commodities data provider SunSirs, the Securities Times reported today.
Steel plants’ blast furnace operations have now steadied after dropping to 86 percent capacity. These foundries must do their year-end restocking, but are daunted by high ore prices. Inventories have been declining mainly because of fewer ship port calls, but rising volumes of cargo in transit and high average daily throughput to ports mean stocks are to poised to rebound in future.

ANZ Job Advertisements

Australia's job advertisements in newspapers and on the internet surged 13.9 percent month-over-month to 145,684 in November 2020, after an upwardly revised 11.9 percent rise a month earlier. This was the seventh straight month of gains in job advertisement, as the economy reopened from coronavirus lockdowns and Victoria emerged out of its COVID-19 lockdown.
"Job Ads are on track to match or even exceed pre-COVID levels by yearend," said ANZ senior economist Catherine Birch. "This suggests that the rebound in national employment could continue into early-2021 at least, although the lagged recovery in full-time employment remains a concern," she added.
On an annual basis, ads fell 3.3 percent.

Looking ahead, nothing too inspiring on the calendar. Brexit headlines are sure to dominate the day.